Friday, June 11, 2010

Best Buy “Price Match” Refusal Would Be Consumer Fraud

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

A Best Buy customer stated plausible claims that the retailer violated the Illinois Consumer Fraud Act and engaged in unjust enrichment by failing to honor its advertised “price match guarantee,” the federal district court in Chicago has ruled.

In a class action complaint, the customer alleged that he purchased a 42-inch wide-screen high definition Samsung television at a Best Buy store in Niles, Illinois. The customer stated that he “considered and relied upon Best Buy’s price match guarantee in making this shopping decision.”

Within the applicable time period, he discovered that a Circuit City store located in the same market area offered a lower price on the same television, which was in stock and available.

The customer stated that he returned to the Niles Best Buy with Circuit City’s print advertisement showing the lower price, and requested the benefit of Best Buy’s price match guarantee—refund of the price difference, plus an additional 10% of that difference. Best Buy refused to honor the request.

Internal Policy

According to the complaint, Best Buy maintains an undisclosed internal policy under which it discourages and denies customers’ proper price match requests. For example, Best Buy allegedly provides weekly bonuses to its salespeople based, in part, on their denying proper price match requests.

Pleading Fraud with Particularity

Best Buy argued that the customer did not adequately plead his Consumer Fraud Act claim because he failed to allege sufficient facts to establish that he was entitled to the price matches he requested. The parties agreed that the case was governed by the heightened standards for pleading fraud under Rule 9(b) of the Federal Rules of Civil Procedure.

The court did not find Best Buy’s argument persuasive. The customer alleged that Circuit City offered a lower price on “an available in-stock product of the same brand and model” as the 42-inch wide-screen high definition Samsung television purchased from Best Buy; that Circuit City was a retail store located in the same market area as the Best Buy store where the customer bought the Samsung television; and that the customer, armed with a print advertisement verifying the lower price, returned to the Best Buy store within the applicable 30-day time period and requested a price match.

The customer sufficiently alleged the elements of the Consumer Fraud Act claim, as well as the common law claim that Best Buy received an unjust benefit from its denial of the price match request, the court determined.

Diversity Jurisdiction

The court observed that the customer failed to plead federal diversity jurisdiction and ordered that an amended complaint be filed.

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About Me

John W. Arden, JD, LLM, is the Executive Editorial Director for the CCH Trade Regulation group of Wolters Kluwer Law & Business, a leading provider of research information and workflow solutions in antitrust and trade regulation, as well as other key specialty areas. He has written and edited legal publications for 30 years, focusing on the areas of antitrust, advertising, franchising and distribution law, and intellectual property.
Prior to joining CCH in 1981, he was a practicing attorney, newspaper reporter, and free lance writer. He holds a B.A. from St. John’s University (Minnesota), a J.D. from DePaul University College of Law, and a Master of Law in Intellectual Property from the John Marshall Law School.